This Day in Crisis History: Sept. 20-21, 2008

This September, MoneyBeat will take a daily look back at the developments surrounding the collapse of Lehman Brothers and the financial crisis that followed. Each day, we will recap the events of the corresponding day in 2008, as the worst crisis in 80 years built to its terrible climax.

Sept. 20-21, 2008

Shoring up financial institutions was becoming a weekend sideline for officials at the Treasury and Federal Reserve.

Morgan Stanley wasn’t taking any chances, though. It continued to hold talks over the weekend with Wachovia Corp. on a potential merger, and simultaneously was lining up an investment from Japan’s Mitsubishi UFJ Financial Group Inc. that would be announced on Monday.

Some U.S. savers got bad news from the Treasury Sept. 21, when it confirmed that an emergency insurance program on money-market funds wouldn’t cover retrospective losses in the Reserve Primary Fund. Panicked investors had pulled $130 billion out of the $3.4 trillion money-market fund industry after the Reserve Primary Fund “broke the buck” the previous week with a drop in its net asset value to 97 cents per share.

In Britain, Prime Minister Gordon Brown told a Labour party conference on Sept. 20 he would do “whatever it takes” to tackle the economic crisis, a phrase that would later be used to great effect by the ECB’s Mario Draghi.